Miner hopes to buy railway to cut costs

May 27, 2008

May 27 (Centralian Advocate) – Thereis light at the end of the tunnel for freight services to continue on the Alice Springs to Darwin railway.Line owner Freightlink has announced it will sell the Darwin to Adelaide rail line after struggling with debt.

The largest mining contract on Freightlink’s books hopes to buy out the railway owner as part of a consortium of mining industry companies.

Territory Resources transported 500,000 tonnes of iron ore from its Frances Creek Mine, 190km south of Darwin, to Port Darwin on the Adelaide-to-Darwin railway for international export in the past year. The company plans to grow that to two million tonnes in the next two years.

Chairman Michael Kiernan said the company was interested in teaming with manganese exporter OM Holdings in a consortium to take control of its current logistics set up. Mr Kiernan said: “We (TR) have the lion’s share of mining freight in the railway, and are like-minded people.”

A long-standing connection between Mr Kiernan and OM Holdings chair John Raubenheimer could guarantee the success of a bid should the companies find a third group to operate the line.

Mr Kiernan said the move, if successful, would cut costs for both mining companies.

He said: “Rail is the single largest cost area for us, so if we can make that more profitable, and cut some transport costs as a shareholder in the company, we will.”

Major shareholder in Territory Resources, Asian logisitics giant Noble Group, could also play a major financial part in any deal struck.

But Mr Kiernan said Territory Resources did not want to operate the rail-line.

He said: “We don’t wish to operate the railway, just to be a financial investor in a consortium, while another consortium member operates it. We’ve declared an interest in buying Freightlink, so we can become masters of our own destinies in terms of rail logistics. So yes, we are vitally interested in buying it.”